3/25/2007

Ariz. seeks new check on eminent domain: Business Week, 3/22/07

By Paul Davenport

Union Pacific Railroad's expansion projects across southern Arizona are drawing complaints, prompting a state Senate panel to call for new state regulatory oversight of use of eminent domain by railroads.

The Senate Natural Resources and Rural Affairs Committee voted 6-0 Wednesday for a previously unrelated bill that the panel rewrote to require that railroads obtain approval from the state Corporation Commission to use existing eminent-domain authority to compel sales of land.

Under the bill, the commission would consider whether a railroad has chosen alternative routes and considered economic and environmental factors.

The committee acted after hearing testimony from a Union Pacific representative defending the railroad and critics who said some of its plans posed threats to farmers and other interests.

Union Pacific "has been an extremely bad actor in this," said Sen. Chuck Gray, R-Mesa. "They have basically used their own force and might ... and picked on the little guy."

Omaha, Neb.-based Union Pacific has several projects either under way or in planning stages in Arizona. Along with double-tracking the Sunset Route main line from El Paso, Texas, to Los Angeles, the railroad plans to build a new switching yard near Picacho.

Both would increase capacity to allow the railroad to run more trains and haul additional cargo, said Chris Peterson, Union Pacific director of government relations. "We have to build the railroad," he said.

Union Pacific also is exploring a possible project to build a new rail line to serve a proposed new Pacific Ocean port in Baja California. As contemplated by Union Pacific, the new line would connect with the Sunset Route near Yuma.

A cotton farmer now leasing state land at the Picacho site and property owners in that area object to the proposed location of the rail yard, including that it'd be on top of Central Arizona Project groundwater recharge site, while Yuma-area farmers say their operations and their crops could be damaged economically and environmentally by the line to Mexico and exhaust from trains running on it.

While critics said UP was secretive in its dealings in the Yuma area, Peterson said key aspects of the Mexican port project had yet to be decided, including UP's involvement.

"We haven't selected a route, and because a single route hasn't been selected," Peterson said. "It's been difficult to know exactly which property owners may be impacted."

The new state regulatory oversight process required under the bill could conflict with federal law and would create "a very subjective process that will serve as an impediment to the railroad being able to add to its capacity," Peterson said.

Paul Muthart, general manager of a Yuma-area produce company, said property owners need some form of protection from railroads' ability to use eminent domain.

"All we're seeking in this amendment is to get an equal-sized gorilla," he said.

Members of the Senate committee said they consider the railroad is an important cog in Arizona's economy but that they couldn't ignore the complaints and concerns.

"They're not going to go away," said Sen. Robert Blendu, R-Litchfield Park.

A separate bill (HB2713) to require public hearings on railroad right-of-way acquisitions was endorsed by a House committee in February but has stalled since.

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